General Motors Position In North America Improves As Toyota Decelerates

Toyota’s fortunes in North America are taking a hit while those of General Motors are looking up. While General Motors reported $2.9 billion in operating profit in the fourth quarter in North America, Toyota saw its operating profit for the region fall by 73%. North America is the most profitable motor vehicle market in the world.

Besides an improvement in operating profit General Motors also saw its pretax profit margin in the region for the whole year reach a level of 10.7% which was the highest level since its bankruptcy at the height of the global financial recession close a decade ago. General Motors expects a strong performance this year in North America as well as across the globe.

Long-term success

“The actions we took to further strengthen our core business and advance our vision for personal mobility made 2017 a transformative year. We will continue executing our plan and reshaping our company to position it for long-term success,” the chief executive officer of General Motors, Mary Barra, said in a statement.

Part of the reason why Toyota’s operating profit in North America fell was because a factory had to be shut down temporarily. Additionally the Japanese car maker has been discounting heavily in a bid to boost sales.

Globally however Toyota’s earnings were better than those of General Motors with regards to the most recent quarter. During that period Toyota saw its operating profit increase by 54% to reach a figure of 673.6 billion yen while that of General Motors increased by 19% to reach a figure of $3.1 billion. This was Toyota’s best performance in a period of two years.

Forex-related gains

However Toyota said that much of the increase resulted from gains related to foreign exchange. Without the forex-related gains Toyota said that its operating profit for the full year would have declined.

Another reason why Toyota and General Motors gave diverging set of results with regards to the North American market is the emerging trend among car buyers in the region. The strength of General Motors is in sports utility vehicles and pickup trucks and this is category that is booming due to the lower gas prices as well as a preference for cars that are more versatile. Last year over 75% of the sales that General Motors made in the United States were sports utility vehicles and trucks. In the rest of the car industry the market share of trucks and SUVs was 63%.

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